Tax brief

December 2019

Punongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd.
BIR ISSUANCES
RMC 116-2019 Treatment of Alien Individuals Employed by RHQ and ROHQ, OBUs and Petroleum
Service Contractors and Subcontractors
RMC 117-2019 Amended Rules on the Use of BIR Printed Receipts/Invoices
RMC 118-2019 Availability of eRegistration (eREG) system to corporate/non-individual employers
RMC 121-2019 Use of computer/ system generated BIR Forms 2306, 2307, and 2316
RMC 122-2019 Semestral List of Regular Suppliers no longer required
RMC 124-2019 Extended deadline for submission of BIR Form Nos. 1604C and 1604F
RMC 126-2019 Use of old version of BIR Form Nos. 2306, 2307, and 2316

SEC CIRCULARS
SEC Memo Circular Guidelines on the Revival of Expired Corporations
No. 23 s. 19

SEC OPINIONS
SEC-OCG Opinion Voting in absentia or waiving stockholder’s right to vote cannot be enforced
No. 19-56

CTA DECICIONS
CTA EB No. 1774 Tax Verification Notice cannot substitute LOA
CTA EB No. 8895 Assessment is essential to a warrant distraint and/or levy
CTA EB No. 9574 Acceptance of an LOA beyond 30 days from issuance still makes assessment invalid

 BIR Issuances
Treatment of Alien Individuals
Employed by RHQ and ROHQ, OBUs
and Petroleum Service Contractors and
Subcontractors
> BIR Issuances (Revenue Memorandum Circular No. 116-2019,
November 06, 2019)
> SEC Circulars
Alien individuals employed by Regional or
> SEC Opinions Area Headquarters (RHQ) and Regional
Operating Head Quarters (ROHQ), Offshore
> CTA Decisions
Banking Units (OBU) and Petroleum Service
Contractors and Subcontractors are subject
to the regular income tax and related
administrative requirements. They may
qualify for substituted filing if considered
resident aliens.
On the other hand, alien individuals
employed by foreign principals rendering
services to the abovementioned local entities
(seconded employees) are also subject to
regular income tax. The following
procedures shall apply for these seconded
employees:
• Under “Current Employment Status” of the
alphalist of employees, a separate
description (“Seconded Employees”) shall be
provided. The BIR should issue an updated
alphalist and Data Entry and Validation
Module to reflect this.
• Seconded employees cannot qualify for
substituted filing. They shall file their annual
income tax return.
• BIR Form 2316 issued to seconded
employees shall indicate the phrase “For
Seconded Employee” which shall be typed or
printed in bold capital letters in parenthesis
under the form’s title.
Tax brief – December 2019
• In case of termination before end of taxable
year, the annualized withholding tax should
be computed and fully withheld.
Amended Rules on the Use of BIR
Printed Receipts/Invoices
(Revenue Memorandum Circular No. 117-2019,
November 06, 2019)
Below are the amended rules on the use of
BIR Printed Receipts/Invoices:
• New business registrants shall be allowed
to buy BPR/BPI at the time of registration, if
they chose not to secure an Authority to Print
(ATP) principal receipts/invoices. The said
BPR/BPI may be used during the first year of
business operation or until full consumption,
whichever comes first.
• The Authority to Print principal receipts/
invoices is required to be secured beginning
the second year of operation or before the
BPR/BPI are fully consumed in the first year.
• Taxpayers which require the use of not
more than one (1) booklet of 50 sets in one
taxable period can secure BPR/BPI even
beyond the one-year period from date of
registration.
• The BPR/BPI is in lieu of principal receipts/
invoices only. Thus, an ATP is required if sup-
plementary receipts/invoices will be used.
Availability of eRegistration (eREG)
system to corporate/non-individual
employers
(Revenue Memorandum Circular No. 118-2019,
November 08, 2019)
Pursuant to RMC No. 118-2019, the
eRegistration (eREG) System is now
available for use by corporate or
non-individual taxpayers-employers in
securing TIN of their employees.
Corporate or non-individual employers shall
enroll an authorized user who shall access
the eREG system of the BIR and apply for
the Tax Identification Number (TIN) of its new
employees without existing TIN. Existing users
of the eREG system are required to re-enroll
to create an authorized user account.
For self-employed individual employers, the
TIN of new employees shall still be manually
secured from the RDO having jurisdiction
over the place of business of the employer.
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 BIR Issuances
Use of computer/ system generated BIR
Forms 2306, 2307, and 2316
(Revenue Memorandum Circular No. 121-2019,
November 25, 2019)
> BIR Issuances
The use of computer/system generated BIR
> SEC Circulars certificates (BIR Forms 2306, 2307, and 2316)
shall be accepted if the BIR Certificates are
> SEC Opinions in accordance with the latest version
officially approved by the BIR.
> CTA Decisions
Moreover, the signatories to the BIR
Certificates must have been duly authorized
by the taxpayer to sign thereof. The BIR
Certificates should contain both the
signature of the parties involved to be valid
and binding.
Semestral List of Regular Suppliers no
longer required
(Revenue Memorandum Circular No. 122-
2019, November 25, 2019)
The submission of SRS as provided under RR
No. 14-2008 is no longer required. This
requirement is deemed abandoned since
it was not mentioned under RR No. 11-2018
which required the TWAs to withhold and
deduct 1% and 2% CWT on their purchase
of goods and services. Consistent with the
policy of ease of doing business, this will also
address the issue on overlapping reports
since the Quarterly Alphalist of Payees (QAP)
and Annual Alphalist of Payees already
contain the same information in the SRS.
Tax brief – December 2019
Extended deadline for submission of
BIR Form Nos. 1604C and 1604F
(Revenue Memorandum Circular No. 124-
2019, November 27, 2019)
The deadline for submission of Annual
Information Return of Income Taxes
Withheld on Compensation and Final
Withholding Taxes (BIR Form No. 1604C
and 1604F), including the alphalist of
employees/ payees for the taxable year
2019, is extended from January 31, 2020
to February 28, 2020. This is due to the
enhancements currently being made by
the BIR to the Alphalist Data Entry and
Validation Module (Version 6.1) which is
prescribed for accomplishing the alphalist
of employees/ payees.
This extension is only applicable for
taxable year 2019.
Use of old version of BIR Form Nos.
2306, 2307, and 2316
(Revenue Memorandum Circular No. 126-
2019, November 27, 2019)
Taxpayers who generate BIR Form Nos. 2306,
2307, and 2316 using their Computerized
Accounting System (CAS) may still use the
old versions of the said BIR Certificates for
transactions covering the taxable year
ending December 31, 2019, pending
reconfiguration of their CAS. The
reconfigurations of all CAS in order for them
to generate the revised format of the BIR
Certificates should be made not
later than December 31, 2019.
4
 SEC Circulars
Guidelines on the Revival of Expired
Corporations
(SEC Memorandum Circular No. 23 s. 2019,
November 25, 2019)
> BIR Issuances
Under Section 11 of the Revised Corporation
> SEC Circulars Code, a corporation whose term has expired
(“Expired Corporation”) may apply for a
> SEC Opinions revival of its corporate existence, together
with all the rights and privileges under its
> CTA Decisions certificate of incorporation and subject to all
its duties, debts and liabilities existing prior
to its revival.
The following corporations may file a Petition
for Revival of Corporate Existence:
a. Generally, a corporation whose term has
expired;
b. An Expired Corporation whose Certificate
of Registration has been revoked for
non-filing of reports (e.g. General
Information Sheet, and Audited Financial
Statements), provided that it shall file the
proper Petition to Lift its Revoked Status,
which may be incorporated in its Petition to
Revive, and must settle the corresponding
penalties thereof;
c. An Expired Corporation whose Certificate
of Registration has been suspended,
provided that it shall file the proper Petition
to Lift its Suspended Status, which may be
incorporated in its Petition to Revive, and
must settle the corresponding penalties
thereof; and
d. An Expired Corporation whose corporate
name has already been validly re-used,
and is currently being used, by another
existing corporation duly registered with the
Tax brief – December 2019
Commission, provided that the former shall
change its corporate name within thirty (30)
days from the issuance of its Certificate of
Revival of Corporate Existence.
The required number of votes for the revival
of an Expired Stock Corporation is at least a
majority vote of the board of directors, and
the vote of at least majority of the
outstanding capital stock. For nonstock
corporations, at least a majority vote of the
board of trustees, and the vote of at least
majority of the members is required.
The guidelines also provide the documentary
requirements and the procedures for the
revival of corporate existence which starts
with the filing of the Petition for Revival of
Corporate Existence with the SEC’s
Company Registration and Monitoring
Department (“CRMD”), any SEC Satellite
Office, or any SEC Extension Office. Please
refer to the full copy of the memorandum
circular as uploaded in the SEC website for
the detailed list of documentary
requirements and procedures for the
application of revival of corporate existence.
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 SEC Opinions
Voting in absentia cannot be enforced
yet; waiving of stockholder’s right to
vote is not valid

(SEC-OGC Opinion No. 19-56, November 28,

> BIR Issuances 2019)

> SEC Circulars The Revised Corporation Code (RCC) now

allows voting via remote communication or in
> SEC Opinions absentia in stockholders’ or members’
meeting, provided that the same is allowed in
> CTA Decisions the corporation’s by-laws. Rules and
regulations governing this shall be issued by
SEC.

However, as opined by SEC in SEC-OCG

Opinion No. 19-56, the same cannot be
enforced yet since as of date, the SEC has
not issued any rule, regulation, circular or
guideline for this matter.

Likewise, a corporation cannot voluntarily

exclude stockholders or members from the
computation of the required quorum since it
will be in the nature of restriction of a
stockholder’s or member’s right to vote. The
right to vote may only be waived personally
upon initiative of the stockholder/member.

Tax brief – December 2019 6

 CTA Decisions
Tax Verification Notice cannot be a
substitute to LOA
(Salcedo Ristorante Italiano, Inc. v Commis-
sioner of Internal Revenue, CTA EB No. 1774 re
> BIR Issuances CTA Case No. 8880, November 4, 2019)
> SEC Circulars Section 13 of the Tax Code states than a
Revenue Officer (RO) assigned to perform
> SEC Opinions assessment functions may examine tax-
payers in order to collect taxes from, or to
> CTA Decisions recommend the issuance of deficiency tax
assessment against taxpayers, pursuant to a
Letter of Authority (LOA) issued by the CIR or
his duly authorized representatives.
The grant of authority is indispensable
before an RO can conduct an examination or
assessment. Absence of an LOA results to the
nullity of the examination or the tax
assessment itself.
In this case, the authority for the
examination of petitioner-taxpayer’s records
originated from a Tax Verification Notice
issued to the RO by the Revenue District
Officer. In connection with the same TVN, the
RO submitted as evidence a Memorandum of
Assignment to prove his authority to conduct
an investigation of internal revenue taxes.
Clearly, the authority of the RO didn’t
originate from an LOA. Consequently, the
resulting tax assessments, including the
deficiency income tax assessments, are
considered null and void.
Tax brief – December 2019
Assessment is essential to a warrant of
distraint and/or levy
(Commissioner of Internal Revenue v Pacific
Hub Corporation, CTA EB No. 1837 re CTA
Case No. 8895, November 8, 2019)
Pursuant to the lifeblood doctrine, the
Supreme Court has allowed tax authorities
enough discretion to avail themselves of the
most efficient way to collect taxes, with as
little interference as possible. The SC also
held that the BIR’s power to collect taxes
must yield to the fundamental rule that no
person shall be deprived of his property
without due process of law. The rule is that
taxes must be collected reasonably and in
accordance with the prescribed procedure.
In this case, petitioner-commissioner claims
that respondent-taxpayer is a delinquent
taxpayer. However, no assessment was issued
for purposes of collecting the delinquent
taxes.
As ruled by CTA, issuance of an assessment
is necessary to proceed with tax collection.
Issuance of a warrant of distraint or levy
without first establishing a valid assessment
is evidently violative of the cardinal principle
in administrative investigation. Hence, when
there is no assessment, the BIR cannot
proceed to exercise the summary
administrative remedy of distraint and/or
levy as provided by law.
Acceptance of an LOA served beyond
30 days from issuance still makes
assessment invalid
(Kokoloko Network Corporation v Commis-
sioner of Internal Revenue, CTA Case No.
9574, November 18, 2019)
The power of a Revenue Officer (RO) to
conduct audit examination of taxpayers
are delegated through a Letter of Authority
(LOA). An LOA shall be served to the taxpayer
within 30 days from its issuance.
In this case, the LOA was served beyond 30
days from its issuance.
The Court ruled that the deficiency
assessment should be cancelled and
withdrawn because the LOA is invalid for
having been served beyond 30 days from
the date of its issuance. The CTA disagreed
with respondent-commissioner’s position
that petitioner-taxpayer should be deemed
estopped because it accepted the LOA even
if served beyond 30 days from the date of its
issuance. There is no basis to rule that
estoppel exists in this particular matter.
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 Highlight on P&A Grant Thornton services
Expatriate tax services
We ensure the proper and efficient compliance of expatriates with their
> BIR Issuance Philippine income tax obligations. Our services include registration and
> BIR Ruling
application for Taxpayer Identification Number (TIN), preparation and
filing of annual Philippine income tax return, and payment of tax due
> SEC Opinion
in the proper venue and within the allowed period. As a value-added
> CTA Decision service, we respond to Correspondence Audits/Inquiries by the BIR
> Highlight on regarding information declared in the tax return. If desired by clients,
P&A Grant we also conduct arrival or departure briefings and interviews to apprise
Thornton the expatriate of his Philippine tax liabilities. Upon a company’s request,
services
we can compute, on an annualized basis, the total withholding tax due
from its expatriate during the taxable year and prepare tax equalization
and reimbursement calculations in accordance with company policies.

If you would like to know more about our services

Marie Fe F. Dawingan
Senior Manager, Tax Advisory and Compliance
T +63 2 8988 2288 ext. 522
M +63 939 933 3911
E mariefe.fawagan@ph.gt.com

8
Tax brief is a regular publication of Punongbayan & Araullo
(P&A) that aims to keep its clientele, as well as the general
public, informed of various developments in taxation and
other related matters. This publication is not intended to be
a substitute for competent professional advice. Even though
careful effort has been exercised to ensure the accuracy
of the contents of this publication, it should not be used as
the basis for formulating business decisions. Government
pronouncements, laws, especially on taxation, and official
interpretations are all subject to change. Matters relating to
taxation, law and business regulation require professional
counsel.

We welcome your suggestions and feedback so that the Tax

brief may be made even more useful to you. Please get in
touch with us if you have any comments and if it would help
you to have the full text of the materials in the Tax brief.

Olivier “Vier” Aznar

Partner, Tax Advisory and Compliance Division
T +632 988-2288 ext. 500
E Vier.Aznar@ph.gt.com

grantthornton.com.ph

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